Business Today

New Merchants of Bacchus

From contract farmers to corporate yuppies and even engineers, everyone is clambering on to the winewagon.

By Tejeesh N.S. Behl        Print Edition: October 21, 2007

Struggling to stem his falling returns from table grapes, Pralhad Khadangale, Chairman, Sankalp Winery, came across Rajeev Samant who convinced him to become a contract farmer for Samant’s yet-to-belaunched Sula wines. “Armed with samples of Sula’s wines, I got them independently verified for quality in the international market, which convinced me that we were on a winning wicket,” recalls Khadangale. He then made samples of his own and showed them to a wine master in France, receiving an encouraging response from him. Thus was born Vinsura, a collective effort by a group of 30 grape farmers who, despite their rural background, have come up with an award winning product — its Vinsura Chenin Blanc 2005 bagged a Silver Medal at the Wine Style Asia Award 2006 held in Singapore.

Pralhad Khadangale, Chairman, Sankalp Winery, Niphad, Nashik district
Pralhad Khadangale, Chairman, Sankalp Winery

Khadangale is part of the growing breed of “vinopreneurs” in India— while Maharashtra alone has close to 50 wineries, including the big guns, Champagne Indage and Sula, other states like Madhya Pradesh, Himachal Pradesh and Punjab are also uncorking their wine potential. And more are in the offing—flamboyance’s poster boy Vijay Mallya is also savouring the bouquet.

But it’s not just the big brands that are planting the vines. Young guns like 26-year-old Nitin G. Shinde, Director, Deccan Plateau Vineyards, are opting for viniculture as a career of first choice. Shinde, who after his graduation went to Australia to study oenology, worked with the more established players—in India and the US—before venturing out on his own from this year onwards. He is expecting an output of 70,000 litres from his first crush next year.

Meet the Makers

For a drink associated with the upwardly mobile—both in terms of consumption and manufacture— the growing breed of winemakers are an eclectic mix. While corporate high-flyers and young, urbane professionals are to be expected, it is the farmers-turned-winemakers who are stealing the show. Many of them were either grape growers, contract farmers for the bigger winemakers or exporters and winemaking was a natural extension of their product portfolio. Says Ashok Gaikwad, Chairman, N. D. Wines: “Growing table grapes is a highfirst toyed with the idea of exporting grape juice but realised that wine had far more potential.” Of course, as Gaikwad recollects, being farmers bred in the rural hinterland, they did feel a bit awkward initially when they had to interact with foreigners. “Our confidence stemmed from our knowledge of the grape varieties and that helped us in our efforts to produce and market a quality wine,” he says. Today, all of these farmers can reel off the names of European grape varieties with consummate ease.

Ashok Gaikwad, Chairman, N.D. Wines, Dindori, Nashik district
Ashok Gaikwad, Chairman, N.D. Wines

And giving them good company are medical doctors and engineers who developed a penchant for the business during the course of their career. Prashant Sankpal, Managing Director, Ritza Wines, is a qualified mechanical engineer who was employed with a winemaking equipment company. Curious to know how the equipment functioned, Sankpal breezed into winemaking through acquisitions of small land holdings.From Napa to Nashik Of the total 6,000 acres under wine plantation in Maharashtra, Nashik alone has close to 4,000 acres devoted to vineyards—an Indian version of California’s Napa Valley, with the scenic quotient also coming in handy. This, coupled with the liberalised wine policy of the state that came into effect in 2001, has prompted many to chuck their regular bread and butter vocations and plunge headlong into winemaking— helped to a certain extent by neglected family land holdings. Yatin Patil, Director, Vintage Wines, and his wife Kiran were comfortably ensconced in their corporate careers when the itch to do something of their own got the better of them. “Our first products hit the shelves in 2006 in Mumbai and this year, we launched our wines in Bangalore. We also have firm orders from the US and plan to start exporting within the coming two to three months,” says Patil, whose plantation is today spread over 100 acres.

Of course, while the enthusiasm was there, the winemakers were realistic enough to recognise that winemaking was best left to wine masters, with most of them hiring wine masters from the major wine producing nations—even though they don’t come cheap. “It costs Rs 15-20 lakh to hire the services of a wine master for a year, during which they make three to four trips. And for a fledgling winery, that kind of money means a lot in the initial years,” says Khadangale.

Banding to Brand Wine being a no-return business for the first couple of years after start-up, smaller players are displaying a proclivity for coming together under a common brand umbrella. So while Vinsura sources its wine grapes from 30 farmers—each has between 10 and 50 acres of land—N. D. Wines has five partners, including Gaikwad. “Given the small land holdings prevalent in India, the financial feasibility of a small winery is extremely poor,” says Dr Jaideep Patil, Proprietor, Kalyani Wines, which has five partners and sells its wines under the Ritza brand. Patil, a practising gynaecologist, runs his own winery and is now planning backward integration by planting his own vineyards. Also, as both Khadangale and Gaikwad point out, hiring the services of a foreign wine master will be nearly impossible for an independent small vineyard owner and so it makes financial sense to pool in resources.

They may be first-timers—with some coming from a completely non-corporate background—but each one of these players knows where to target his product. Khadangale, for instance, has identified a site on his vineyard plantation, just off the highway, for a wine bar that he says should be operational within six months. “The idea is to take advantage of the setting—within a vineyard—and encourage people to taste our products,” he says.

Others like Shinde are planning for the upper crust of consumers, both in India and abroad, including the US, Europe and the Far East. “I am planning to limit my production capacity to 2.5 lakh litres to concentrate more on quality,” informs Shinde, who has also hired a consultancy service to promote his brand. Given the current economics of the market where wine is perceived as an upmarket drink, these entrepreneurs are keeping the prices within sighting distance of the middle class—between Rs 100 to a little over Rs 1,000.

And while wine tasting sessions at luxury hotels remain the norm— Vintage Wines’ Yatin Patil recently held a session at a Mumbai hotel— some like Dattatreya Dnyadev Tupe, Managing Director, Associates Wines, are going in for the masses. “Wine needs to be made a mass market product, for which prices need to be kept low, which is why we introduced a 180 ml pack priced at Rs 25,” he says.

Yatin Patil, Director, Vintage Wines, Niphad, Nashik district
Yatin Patil, Director, Vintage Wines

Tupe, in fact, has gone a step further by introducing publicity material in Marathi, listing the benefits of wine consumption vis-à-vis molasses and grain alcohol. “Along with these posters, which have been put up in beer bars and liquor shops, we are also offering accessories like wine openers and wine glasses free of cost with every bottle,” adds Tupe.

There are still others like Sankpal who are directly targeting the wine distributors by getting them to vet their product personally through tasting sessions. He says, though, that these sessions perforce need to be organised in hotels in Mumbai, which as a city accounts for 40 per cent of India’s total wine consumption.

Points to Ponder No doubt, winemakers are happy with the special incentives being announced for the industry by the government—the most important being the clubbing of wine with the food processing industry. Still, the players say there are some press-ing issues that need to be addressed. “While wineries are treated as agroprocessing units by the Central government, they are still subjected to a sales tax of 20 per cent, as against 4 per cent charged on food processing units,” says Dr Jaideep Patil.

Sankpal further adds that the dynamics of the wine industry are very different from those of other industries. For one, production starts only two to three years after plantation, which means blocking the capital without returns for that period of time. “While we can raise loans for plantation, we also need to raise money for marketing. Typically, for an investment of Rs 1 crore in the winery, you require twice the amount for marketing and sales promotions, for which financial institutions don’t lend support,” says Sankpal.

Of course, as Yatin Patil says, it’s still not easy to get a loan for starting a winery, and when you do, there’re the distributors and retailers to contend with, who demand big discounts as the market is dominated by old industry players. “Besides, advertising of wine is still taboo and we have to depend on word-ofmouth publicity,” adds Patil who has forsworn freebies or discounts.

That wine largely befuddles the Indian palate is another headache these winemakers face. “Despite all the publicity in the media about wines in India, you’ll be surprised to see the ignorance levels among the swish set who are largely caught up in the hype,” says Patil, who proceeds to bust another myth, that older the wine, the better it tastes: “Rubbish. Each wine has a particular shelf life during which it achieves its peak and then deteriorates.”

But if there is one grouse that makes all of them see claret, it’s the nomenclature of the neighbourhood liquor shops across the country that carry the signboard of a wine shop. “Due to this misnomer, people have come to associate wine with hard liquor and matters have not been helped by the sight of drunks lying prostrate on the pavements or roads near these shops,” rues Khadangale. But these are minor hurdles that the new winewagon will have to negotiate on its way to the Indian and global markets.

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